Brent rough oil prices jumped above $65 per barrel for the first time since 2015 after the shutdown of the Forties North Sea under way knocked out significant supply from a market that was already tightening due to OPEC-led manufacturing cuts.
Brent crude futures, the international benchmark for oil prices, were at $65.29 a barrel at 0253 GMT, up 60 cents, or 0.9 percent, from their newest close.
That marks the first time Brent has risen atop $65 since June, 2015.
U.S. West Texas Intermediate (WTI) crude approaches were at $58.30 a barrel, up 31 cents, or 0.5 percent, from their newest settlement.
“Brent crude raced higher … as news flat that the North Sea’s Forties Pipeline system would have to be isolate down for a ‘number of weeks’ after a hairline crack was found in it,” said Jeffrey Halley, superior market analyst at futures brokerage OANDA in Singapore. “The pipeline … is a valued component underpinning the Brent benchmark.”
Britain’s Forties oil pipeline, the sticks’s largest at a capacity of 450,000 barrels per day (bpd), shut down on Monday after splits were revealed.
“The market reaction shows that in a tight shop, any supply issue will quickly be reflected in higher prices,” said ANZ bank.
The lurch in Brent prices widened its premium to WTI prices to almost $7 a barrel, up from approximately $5 last week, making U.S. oil exports more attractive.
The poorer WTI is also a result of rising U.S. oil production, which has jumped by more than 15 percent since mid-2016 to 9.71 million bpd, be opens not seen since the early 1970s.
U.S. production is now also not far off that of top impresari Russia and Saudi Arabia.
The rising U.S. output threatens to undermine struggles led by the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC financial managers, most importantly Russia, to support prices by withholding supplies.
OPEC and its combines started withholding supplies last January and currently plan to persist in doing so throughout 2018.